13 home buying tips for 2013

(MoneyWatch) Although housing prices started to rebound last year and are expected to continue rising in 2013, it's still a buyer's market. Prices remain 30 percent below their peak before the housing crash and mortgage rates hovering at all-time lows. If you are ready to jump in to the real estate market, here are 13 house-hunting tips for 2013.

1. Run the numbers. Put together a financial plan to determine whether you can really afford to buy. After all, just because it's a good time to purchase a home doesn't mean it's a good time for YOU to buy. It's important to understand how much home you can afford and whether home ownership might preclude you from addressing other important financial issues in your life.

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2. Save 20 percent for a down payment. I'm not a huge fan of putting down less than that amount (although the Federal Housing Administration allows it). Keep your downpayment fund in cash or cash equivalent accounts, so that market movements don't thwart your plans.

3. Use this great "rent vs. buy" calculator from the New York Times. Renting might still be the better deal in your area.

4. Be an informed buyer. You're not going to buy a house simply because there's a pretty photo posted online, but you can conduct a lot of price research. That said, there's nothing better than talking to people in the neighborhood for "on the ground" intelligence.

5. Obtain a copy of your credit report. If you haven't done so in a while, go to AnnualCreditReport.com and request your free copy. It's important that you correct any errors on the report before you start the mortgage process.

6. Get pre-approved for a mortgage. Pre-approval is a good gut check on your price range for a home. Gone are the days that banks will fork over cash to anyone with a heartbeat. The best way to start is to ask friends for referrals from mortgage brokers and to shop around with banks and credit unions. Make sure to compare apples to apples and to ask the broker about your total costs to you at closing. You should also know that once you actually find a home, the mortgage process is on the same pain level as a root canal, only it requires more patience and there's no Novocain. You'll need to dig up tons of paperwork and fair warning -- there will be multiple requests for even more documents as you move toward closing. Eventually, you will need "commitment letter," which details the terms of your loan approval.

7. Find an agent. As much as everyone complains about realtors, I still think that it's tough to go through the home buying process alone. In some markets, buyers' brokers are available, but the most important qualities in brokers are honesty, experience, good connections with other agents, and good referrals from buyers like you. Remember that most agents represent the seller, not the buyer.

8. Hire a real estate attorney. This is a major transaction in your life, so don't try to save money when it comes to legal fees. Even if your mortgage company provides a lawyer, hire your own to help draft all documents and to ensure that your interests are being represented at every step of the process.

9. Get an appraisal. An appraisal will determine the market value of the property and ultimately will be used by your lender to determine the amount of your loan. You have a legal right to get a copy of this and will want a copy for your records.

10. Schedule a home inspection. Think you've found your dream house? Maybe, but unless you have an engineer walk through the premises with you, you might be buying a new roof in a couple of years. Don't get freaked out if a problem arises during the inspection; it can often be addressed with a simple adjustment in price. It's imperative to protect yourself, so don't blow off this important step.

11. Start with a fair offer. The offer should be based on similar houses sold in the neighborhood in the past six months. Your agent will help you with the process, but the offer should include the price you're willing to pay for the house, your financing terms and contingencies such as specifying what will happen if any problems come up during the inspection.

12. Purchase homeowners insurance. If you are a life-long renter, this can be an eye-opener in terms of cost. Make sure that you understand the difference between insuring the structure and insuring the contents. And if you are buying property that is close to water, make sure that you have an agent who can help you enroll in the national flood insurance program.

13. Review your HUD statement BEFORE closing. The government document provides basic details about the involved parties and a lot of numbers. Mistakes do occur, which is why it is vital that you review the statement and confirm that everything is correct.

[JHONEMIKL]

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[hjames1623]

Thanks for these tips! There are some great homes for sale in Marietta, GA and my mom is really pressuring me to move back down there. I'm just nervous because I've never bought something so big and expensive. It's a big decision! Thanks again! http://www.cathymeder.com/Marietta.php

[rockybalsamo]

In #7: "Remember that most agents represent the seller, not the buyer." REALLY?! That's just not true - serves to exacerbate negative Realtor stereotypes. In fact, if the author properly educated herself on the national real estate market, she would have found that in almost every state, there are recognized buyer's agents and seller's agents who have a fiduciary responsibility to the client they represent in the transaction. The idea of "buyer-beware" has been gone for close to two decades. A quick fact-checking call to the NAR (National Association of Realtors) would have proved wise.

[123-cbsnews]

My father owned four or five houses, some of my family is still in last house, don't listen to anything this idiots say, a quote "a house is a place to live and keep your stuff" it's not a investment.

The market was stable since 1945, the people in the industry including banks, insurance, law firms, and real estate agents are "still" criminals. That house you by a short sale values, cost 3x more five years ago, but if you have to sell it its not 10-15 days anymore, more like 10-15 years. Good luck with that you can lose everything.

Housing, thirty year mortgages, are all based on jobs for life, which does not happen anymore.

[joe-greene]

Central PA has been a buyer's market since 2008 and is just now on the verge of the balance category. A year ago there were 8 seller's for every monthly sale, today it's 6.2 (a balance is one having 5 to 6 seller's for every one, monthly sale). Many market's within are already seller's markets, and strong one's at that. Documentation on how the seller to sales ratio affects values visit SupplyDemandHarrisburg dot com.

[Krowster]

This information is as dated as the homes on the market today. here's the real scoop, don't buy, rent.

Nonsense No. 1 - tax breaks. Given the money you will spend on mainteneance in and out of the house, its't worth it.

Nonsense No. 2 - Taxes will kill you; especially, if you live near cities or schoiols.

Nonsense No. 3 - Bank and brokers will eat you alive. If you buy, buy directly from the owners.

Nonsense No. 4 - Once you're in, you'll never know ehen you'll get out.

Nonsense No. 5 - Owning a home is pure hype. It's just another costly status symbol. After a couple of years, your lovely dream home will be just a large mouse trap.

Rent a house, pay the extra few bucks, when you get tired, pack and leave. Now that's heaven.

[askagain]

If I ever purchase another home, I will take #4 seriously. After we moved into our current home, a family bought the home next to us. They are like a neighbor from hell. This family does nothing to keep-up or improve their home. Their garage doors are always open allowing a 24/7 view of their messy garage, they parks cars on their front lawn, rarely mow the lawn, and leave junk all over their yard. Although we had no idea when we bought our home of who would buy a home next to us, we would at least ask potential neighbors about the habits of those living near any home we might buy in the future.